Q&A: Francesco Copello on monitoring hospital expenses

In Genoa, Italy, the people say "a good reputation is worth more than a million." That sentiment is reflected in the philosophy at San Martino Regional Hospital, a leading provider of comprehensive health-care services for metropolitan Genoa and Liguria.

Since 1422, San Martino Regional Hospital has drawn patients from all over Italy and around the world. A prominent center of excellence for cardiac and neurologic surgery and care, hematology, transplants, and emergency care, the hospital averages 80,000 inpatient admissions, 8 million outpatient cases, and 100,000 emergency-ward visits a year.

We use SAS on a daily basis to carry out analyses that verify department activities and establish budgets with great results. One medical department has saved €1 million in one year.

Francesco Copello
Health Care Director

So it's no surprise that managing clinical risk is a critical component of San Martino's mission. Without reliable risk models for each department and operational unit, the hospital corporation would see enormous increases in insurance costs.

Extensive process redesign reduces the risk and cost of errors related to the preparation and delivery of care and prescription medications. IT systems, therefore, represent a point of strength for the company, and the choice of advanced technologies has positioned the hospital as a beacon of excellence in health care.

In the Q&A that follows, Francesco Copello, the hospital corporation's Health Care Director and a former physician and Management Control Director at the hospital, explains how San Martino uses IT to control costs and ensure an even greater quality of patient care.

How does one reduce risk in an enterprise of this size?

The challenges of such size are numerous. They start with the transportation of people and things: the movement/transfer of patients, biological materials, test tubes, and reports, as well as all of the provisions in terms of goods and services. It's clear that a fundamental issue is to allocate resources correctly.

Are you referring to management control?

Exactly. The role was initiated in 2000 and entrusted to me in 2002. I still consider this extremely strategic for health-care management. Previously, to organize activity and budget plans, we relied on so-called records to reassign objectives to various departments in the previous year. This proved to be unsound and frequently the cause of budget deficits. We also found management based on literature to be inadequate, because it inevitably leads to wasted resources.

All this before the creation of the role – what happened after?

The creation of the management controller role, adequately supported by advanced IT tools, led to greater understanding and analysis of our individual cost centers and production centers. We can now assign resources during budget planning. Contrary to what occurred earlier, we can more precisely monitor expense trends by bringing together all the data that the system provides.

Previously, we implemented reporting systems and adopted a balanced scorecard. This was followed by cost analysis. Initially, on the basis of the current system for the classification of admissions based on Diagnostic Related Groups (DRGs), we analyzed costs for a standard admission.

But we lacked a good analysis of costs relating to individual processes, from hospitalization to drugs to diagnosis. Day admissions, outpatient care and emergency care remained uncovered and lacked in-depth analyses. It was urgent, therefore, to get specific data on the costs of individual activities, products, and drugs. In essence, if the cost of an appendectomy was evident, we wanted to break down those costs into individual processes.

In which sectors do you want to improve knowledge of costs?

Initially, we were particularly interested in delving into costs of outpatient services, day admissions, emergency and special departments, including the Transplant Center. With the deployment of SAS Cost and Profitability Management, we can now analyze production costs, cross-referenced by admissions, services – virtually all activity in the organization. The result is a detailed estimate of what each single activity costs San Martino.

How does activity monitoring figure into this picture?

Monitoring was one of our priorities, which led to a radical cultural change from the past, helping us develop a culture of collaboration among all department managers and sharing a single perspective.

In this way, each manager can assess how we consume our available resources. Currently, the information and analyses produced through SAS are published on our intranet to the executive board, department directors and directors of the operational units. We can drill down to granular detail – down to individual aspirin tablets.

Is there a system for classifying admissions?

Certainly. We developed a method using health-care diagnosis methods that has been very useful. Previously, we analyzed costs on the basis of product units – that is, the DRGs. Until last year, we used DRGs to understand whether certain operational units recorded excessive expenses in certain sectors.

Since DRGs didn't perfectly respond to our needs, we were motivated to improve. We rationalized expenses and standardized behaviors in each operational unit. We also did all of this with SAS, because it perfectly supports clinical management processes.

What are the cornerstones of the activity that SAS supports?

First, we identify approaches for measuring and standardizing patient-care activities – while retaining proper flexibility and a constant willingness to change and improve. The second cornerstone is system-monitoring metrics/indicators. Third is auditing, and fourth is risk management for patients and staff.

In particular, we recognize that the most dangerous risks are inherent to routine, daily activities. We have procedures for risk assessment and incident reporting: the first assesses activities to identify possible risks. The second defines the event at the moment it occurs and provides possible interventions.

Another key point is our project to determine how much it costs per hospital bed for a single dose of a drug. Drugs are barcoded and tracked along their entire journey from the cabinet to the intelligent cart all the way to the patient.

Have you quantified the benefits?

We use SAS on a daily basis to carry out analyses that verify department activities and establish budgets with great results. One medical department saved €1 million in one year. And we have turned 54 percent of low-complexity activities into an alternative system (for example, low-impact surgeries, therapies and treatments that allow patients to return home the same day) and, as a consequence, we managed to reduce hospital beds from 1,900 to 1,600 in very little time.

In practice, we have improved occupancy rates, which today is about 85 percent, keeping the standards unaltered, and reduced the average stay from 12 days to 10.

This story was translated from the original Italian version published on ITA.SAS.COM.

Challenge

Support management control by assessing the individual cost of each activity that occurs in departments throughout the hospital.

Solution

Benefits

Occupancy rate improved to 85%.

Average length of stay down from 12 days to 10.

The results illustrated in this article are specific to the particular situations, business models, data input, and computing environments described herein. Each SAS customer’s experience is unique based on business and technical variables and all statements must be considered non-typical. Actual savings, results, and performance characteristics will vary depending on individual customer configurations and conditions. SAS does not guarantee or represent that every customer will achieve similar results. The only warranties for SAS products and services are those that are set forth in the express warranty statements in the written agreement for such products and services. Nothing herein should be construed as constituting an additional warranty. Customers have shared their successes with SAS as part of an agreed-upon contractual exchange or project success summarization following a successful implementation of SAS software. Brand and product names are trademarks of their respective companies.